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4.1 DRAFT MINUTES (1 SET) 10-05-2020 Special Meeting of the Elk River City Council and the Housing and Redevelopment Authority Held at Elk River City Hall Monday, September 8, 2020 Council Present: Mayor Dietz, Councilmembers Garrett Christianson, Matt Westgaard, Nate Ovall, and Jennifer Wagner (5:50 p.m.) HRA Present: Chair Larry Toth, Commissioners Michelle Eder, Jayme Swenson, and Denny Chuba City Staff Present: City Administrator Calvin Portner, Economic Development Director Amanda Othoudt, and Planning Administrative Assistant/Recording Secretary Jennifer Green Others Present: Jesse Hartung, President of Modern Construction 1. Call Meeting to Order Pursuant to due call and notice thereof, the meeting was called to order at 5:46 p.m. 2. Modern Construction – Development Concept Proposal Ms. Othoudt presented the staff report and introduced Jesse Hartung of Modern Construction, who outlined a presentation called The Ecology Project, a 127-unit mixed-use development project in downtown Elk River. He explained the components of the project, addressing improvements to parking, street, pedestrian, and trail traffic, outlining ways to support small business owners during and after the proposed construction, and his proposed project timeline. He stated he is working on financing partnerships and lenders who would like to support this project. He felt once contractors and permits were in place, a January 2023 project completion is feasible. Mr. Hartung reviewed the specific amenities, buildings, building features and outlined millions of dollars in public improvements proposed by private parties. Amenities included: bicycle lockers, a public terrace, public restrooms, pedestrian walkway, hotel, banquet hall, a retractable glass rooftop restaurant, a public lobby showcasing green building construction and sustainability of buildings and include information kiosks showcasing the use of solar panels, rainwater runoff treatment collection that’s used for irrigation, and how waste is recycled. He stated this project overall would be a $40 million dollar investment and is partnering with Shawn Carlson of Carnegie Commercial Lending to broker the deal. Mr. Carlson is reviewing the proforma costs and plans associated and stated there would be many lenders who would want to get involved into this development project. Mr. Hartung outlined how he proposed the city would play in this project and proposed: City Council Minutes Page 2 September 8, 2020 ----------------------------- - Private Equity – 20-30% equity supplied by very small group of investors (himself and a few others) - Bank Mortgage – mortgage financing will take over after occupancy (construction financing will convert over to mortgage at a point of a certain occupancy level, slating to be a 20-year mortgage) - Incentive – public incentives to offset some costs of public improvements Mr. Hartung outlined the public incentives and proposed a trade in-kind improvement of land and all permits, utilities, and related fees in return for the public improvements being made to parking, restrooms, street/sidewalks, greenspace, and informational lobby. Mr. Hartung stated he wants the city and the taxpayers to win on this project and stated for every $3 of public improvements, $1 is credited towards fees. He feels this partnership would greatly benefit the city because taxpayers would receive an instant 300% return on their money. He explained in addition to the expansion of public amenities and services, the city will save millions in cash, labor hours, and equipment time for the long-term upkeep of the existing lot. He stated if this project does not happen, the city will have the same parking problems, lack of additional public amenities, and pass over a wealth of economic activity and population growth. He then outlined the project against the Comprehensive Plan and stated he felt this project fulfills many of the plan’s goals and objectives. Mr. Hartung asked the City Council and the HRA to consider the following: 1. To agree in principle to the incentives with the final decision and dollar amounts rd based on 3 party ROI determinations. 2. To accept parking quantities proposed as a worst-case minimum, with an understanding that additional improvements may be possible. 3. Have a willingness to consider alternate street and traffic flows downtown if studies indicate improvements are possible. 4. Offer a commitment that the city will work as fast as Mr. Hartung can to get final documents back to the city council for review and approval. Mr. Hartung stated his original request was going to be to merge the Planning Department with the Street Department as he felt those departments are good at putting up roadblocks but felt that request was bold. He stated he simply wants the council to direct Mr. Portner to direct city staff to say, let’s make this thing happen, let’s not put up roadblocks, let’s not fight along the way. Chair Toth asked how many feet down the proposed parking levels go. Mr. Hartung stated each level would be 11’ so approximately 22’ below. He stated Bogart and Peterson are providing historical site data as he has heard there is a stream running underneath the proposed area, but they did not feel it would be a huge concern. He stated before spending money on drilling, he would await their findings. Chair Toth asked where the Farmers Market would be held. City Council Minutes Page 3 September 8, 2020 ----------------------------- Mr. Hartung stated he met with Karen Wingard who manages the Farmers Market and felt they came up with some great ideas on keeping the market downtown, and where to hold it in the new development as well as provide a space for a winter market. Chair Toth asked about the proposal for a one-way Main Street and where would the traffic exit. Mr. Hartung explained a traffic study would reveal more details about the best traffic routing design. Chair Toth asked about the future of the Elk River Meats building. Mr. Hartung stated he has had ongoing discussions with the owners of Elk River Meats and discussed mutual goals of enhancing their building and increase their business if they chose to remain in that location. He stated when the owners are ready to retire, he has designed a plan to offer them a premium for their land and building and incorporate the space into the project. He stated the owners are not ready to make any decisions at this time. Commissioner Swenson asked for clarification on the residential parking spaces for the 127 mixed units, and Mr. Hartung clarified one parking unit is proposed for each studio, 1- and 2- bedroom units, and two parking units for the townhouses and 3 bedrooms. He stated they could sell additional spots as they will have additional spots available. Several members of the audience spoke. The owner of Olde Main Eatery expressed concerns with the lack of parking for his restaurant as well as other area businesses during the first six months of construction and how that would negatively affect his business, stating his business needs at least 30-40 parking spots for operation. Mr. Hartung stated the parking ramp would be open in a matter of months. He stated if the Council and HRA could come to an agreement tonight, and when he comes back for official vote, he could present some options to the affected businesses and seek ways to stage the project to minimize parking impacts. He stated he would like the local business’ feedback. He discussed a creative marketing budget to include some incentives and assist in parking off-site. Frank Galli felt a six-month project of this size in a small community can be devasting and asked what could be done. Mr. Hartung provided a suggestion to mitigate the effect of decreased parking by making Jackson Avenue a one-way and doubling the parking along both sides of the street. He stated he hopes and will push for a shorter timeline and will guarantee that City Council Minutes Page 4 September 8, 2020 ----------------------------- contractually. He also asked what the effect of the 169 Redefine have on the downtown. He stated he recognizes this will impact the downtown businesses but will do his best to mitigate them. He again stressed feedback from business owners. Beth, owner of Antiques Downtown, stated the construction of this project would kill her business. She explained how her 50 vendors transport their wares into the building and with this proposed plan, their ability to do so would be taken away. She felt her vendors would disappear without the ability to access the building during construction. She felt she heard similar promises during the building of Granite Shores and Jackson Place. Mr. Hartung suggested a dedicated loading dock could be proposed and improvements can be made for an even better transport of vendor wares. Mr. Hartung stated he understood the fear of having the businesses affected during construction and looked forward to sitting down and helping business owners find ways to overcome these obstacles. He discussed marketing proposals and incentives to draw patrons into their businesses during and after construction. Chair Toth stated the meeting time limit had been reached and understood there would be many questions and concerns with a project proposed of this magnitude, stating the HRA and Council would need time to digest this project proposal. He stated at some point there would also have to be some public hearings to ask and answer these questions. Mayor Dietz thanked Mr. Hartung for his time and effort into creating and presenting this proposal. He stated a formal decision or commitment would not be made that evening, stating there is a due diligence process to follow. He stated he heard a lot of great ideas and the Council will take everything from all affected parties very seriously before formal adoption would take place. He asked Mr. Hartung to be patient as this proposal needs to take the proper course. Mayor Dietz asked for a detailed proposal from Mr. Hartung outlining all aspects of the project. Mr. Hartung asked the council and HRA to digest his project presentation and not allow it to get caught in a government gridlock. He felt there was a wealth of supporters of this project and he would love to have their voices heard. Mr. Hartung stated he would put together a detailed project outline. 3. Adjournment There being no further business, Mayor Dietz and Chair Toth adjourned the joint meeting of the Elk River City Council and Housing and Redevelopment Authority 6:54 p.m. Minutes prepared by Jennifer Green. City Council Minutes Page 5 September 8, 2020 ----------------------------- ___________________ John J. Dietz, Mayor ___________________ Tina Allard, City Clerk